Projo Biz Blog

Textron has been added to the SPADE Defense Index, a benchmark that investors use to evaluate publicly-traded defense contracors, and the Providence-based company could use the exposure to support its stock price.

Shares in Textron (TXT:NYSE) on Tuesday, the first day of trading in the new year, fell $4.49 a share, or 6.3 percent, to close at $66.81, after the company was cut to “hold” from “buy” by Citigroup Inc.

Analyst Jeffrey Sprague, who has had a “buy” rating on Textron’s stock since July 2004, called the stock “less compelling” after it rose more than 50 percent last year. “Textron deserves real kudos for what we view as its excellent performance, but the disconnect between the fundamental opportunity at Textron and investor perception is now greatly diminished,” wrote New York-based Sprague. Rising corporate profits are driving demand for Cessna jets, prompting the company to book more orders than it can fill. The company’s Bell helicopter unit is also benefiting from heavy use of choppers in Iraq and Afghanistan. “At current valuation, we believe the stock does not leave much wiggle room for Bell to have a misstep along the way to what should be a bright future,” Sprague wrote. “We remain positive on business jets and helicopters, which is the key driver of Textron’s sales and profits.”

This morning at 10 a.m., Textron's stock was up 22 cents a share to $67.03.

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